Bond Coupon Rate

What is a Bond Coupon Rate?

A bond coupon rate is the rate of interest a corporation pays on a bond it has issued. 

How it Works

A corporation may need money to fund a project. 

One way for the corporation to raise money is with a bond.

A bond has a face value. 

This is how much investors will pay for the bond. 

The bond will also have a coupon or stated rate. 

This is the rate of interest the issuer will pay the investor along the way. 

The coupon rate is determined by the issuer at the time of issue. 

Typically, it is based on prevailing interest rates at the time of issue.

© R.J. Hickman 2020